Endo said its cash-and-stock offer valued at US$175 per share is worth about 11 per cent more than the US$158 per share Salix agreed to from Quebec-based Valeant.

It called its offer a "superior proposal" that will deliver a substantial premium and opportunity for Salix (Nasdaq:SLXP) shareholders to gain from taking a large equity stake in a specialty pharmaceutical company positioned for growth.

Endo (Nasdaq:ENDP) said the transaction could close in the second quarter. The company said it is confident of obtaining regulatory and shareholder approvals.

Valeant (TSX:VRX) wouldn't say if it will consider boosting its cash offer.

"We are firmly committed to our all-cash agreed transaction, which delivers immediate and certain value to Salix shareholders," a company spokesman wrote in an email.

The Montreal area stands to gain US$406 million in break fees and expenses if Endo ultimately triumphs.

The tender offer is scheduled to expire at the end of the day on March 31, 2015, and Valeant expects to be in the position to close the transaction on April 1, 2015 — the largest deal in its history. It follows the US$400-million acquisition of oncology drugmaker Dendreon.

They are the first major transactions since Valeant came up short in its hostile bid last year for Botox maker Allergan, which was eventually acquired by Actavis. Despite failing to acquire Allergan, Valeant pocketed a net gain of US$287 million after selling its shares in Allergan.

Valeant expects Salix will contribute modestly to its 2015 cash earnings per share, but projects a 20 per cent boost in 2016. The company is banking on the U.S. Food and Drug Administration granting approval for Xifaxan, a new Salix drug to treat irritable bowel syndrome with diarrhea.

Analysts said the Salix deal was positive for Valeant by adding another specialty area that will eventually boost earnings.

On the Toronto Stock Exchange, Valeant's share closed at C$247.51, down 3.1 per cent or $7.94. Salix share rose nearly seven per cent to $168.61 on Nasdaq while Endo closed down 1.39 per cent to $87.76.